RIGA, Jan 31 (LETA) – Latvia should develop a clearer and stronger commitment to achieving macroeconomic stability, according to the European Commission’s report on Latvian National Reform Program for Growth and Jobs (NRP), drawn up by the Latvian authorities.

The Commission concludes that the program identifies and responds to the main economic challenges facing Latvia, that it is broad, coherent and ambitious. However, it is not always possible to fully determine in the program in the likely effects of policies set.

The NRP identifies five main economic policy directions: securing macroeconomic stability; promoting knowledge and innovation; establishing favorable and attractive environment for investment and work; fostering employment and improving education and skills. The Commission shares the NRP’s analysis of the main priorities.

According to the Commission, the NRP’s strong points include the focus on research and development and on information and communications technologies and reforms envisaged in those areas. The commission also praised the measures aiming at improving transport infrastructure and promoting inclusive labor markets.

However, the Commission’s Progress Report urges the Latvian authorities to put more effort and consideration into establishing macroeconomic stability, including strengthening fiscal consolidation. The Commission’s Report also calls for further policies to stimulate partnerships between research and education institutions and business enterprises.

The report also advocates stronger measures in adapting education and training to labor market needs and in developing and implementing a coherent lifelong learning strategy.

Due to one of the highest productivity growth rates in the European Union (EU), Latvia’s real gross domestic product (GDP) has grown since 2000 at an annual average rate exceeding 7 percent. GDP per capita rose to 43 percent of the EU average in 2004, which is, however, still the lowest in the EU.

The commission notes that it contrasts with much slower progress in the labor market – the total employment rate (62.3 percent in 2004) remains 1 percent below the EU average, and the unemployment rate has only recently fallen below 10 percent. Imbalances, as evidenced by high inflation and a wide external account deficit, persist.

National Reform Programs offer a concise overview of planned macroeconomic, microeconomic and employment reforms at the national level for the period 2005-2008. They were drawn up by the EU member states for the first time in autumn 2005 on the basis of a set of 24 Integrated Guidelines proposed by the European Commission and agreed by state and government leaders.

These programs are a key element in the redesigned arrangements under the EU’s Lisbon Strategy for Growth and Jobs. The new way of working has reinforced the partnership between the Commission and member states and is beginning to give new impetus to the drive to increase prosperity and to allow more people to share in it. For example, the new system helps identify the many examples of successful and innovative policies which exist in every member state, so that others can learn from, adapt and adopt them.

Nade Titova LETA
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